The sixth annual Corporate Directors Forum just completed last week, one of the most in-depth and intimate conferences of its type in the country. No more than about 250 people can attend the conference, held at the University of San Diego. Top leaders from corporate board rooms, the SEC, executive management, institutional investors and academia come together to actually talk to each other about the myriad challenges of conducting business in a democratic, capitalistic country.
We heard from the likes of Bob Doll, chief equity strategist for fundamental equities at BlackRock, which holds $3 trillion in assets under management. Anne Mulcahy, the person responsible for saving Xerox as its CEO between 2001 and 2009, described her experiences there. Ira Millstein, a nationally revered equities attorney, professor, author and adviser to government and business alike, offered guidance to us all that rang with grandfatherly truth.
Unfortunately, I can’t tell you what anybody actually said. The environment would not be even slightly as educationally valuable if the participants thought a journalist was going to pick and choose what to put in the morning’s news. I can tell you, however, that along with the great information and debates about corporate governance in the United States, I learned something I didn’t expect to learn.
I sat there in the audience, listening to the sophisticated, complex discussion about everything from proxy access, to shareholder voting on executive compensation, to increased regulatory oversight, to the Supreme Court’s designation of the corporation as an individual under the First Amendment. I listened to shareholder activists and board directors discuss how they should improve their dialogue. I looked around the room at the intent faces of well-dressed leaders from around the country. It occurred to me, “The vast majority of all of us in this room have not been truly affected personally by the economic implosion of the last four years.”
Sure, some of us had our net assets “corrected” by double-digit figures. Some of us may not be able to take that two-month sabbatical to France we planned. A few might have had to sell their third home. None of us really have to consider the price of a gallon of gas when deciding whether or not to take a vacation. None of us are worried about being evicted. None of us are concerned about supporting our kids through college. Nobody is missing a meal.
We’re the two per cent that make over (and in some cases, well over) $250,000 income annually. We’re part of the two per cent that has accumulated hundreds of billions in net worth, while at the same time the “bottom” 80 per cent has lost the same amount from their family balance sheets. We are the “have’s”.
This came as a shock to me. I’m a “have”.
My journey to adulthood was not on a paved road. We lived in trailer parks, most of the time, never owned a home. Our toys were often those rescued from dumps and repaired. We moved two or three times a year. (No, Dad wasn’t in the military. Long story. I’ll tell you over a beer sometime.) I worked my way through school, no loans or scholarships. I’ve never thought of myself as a “have.” I’ve always identified with the janitor, the mechanic, the production line worker, the dishwasher, the street sweeper, the plumber, etc.
And now I understand why “my people” have been treating me differently these last few years. They don’t consider me part of their tribe anymore, and they are increasingly resentful of my relative comfort. The “have not’s” are the ones who are losing their homes, declaring bankruptcy, moving a thousand miles to get work, going without health insurance because they can’t pay the premiums instead of buying food and gas. The “have not’s” are looking at a long slow slog ahead as the economy improves gradually. The “have not’s” are graduating from college and working in service jobs far longer than they thought would be necessary.
The people who are truly struggling are becoming even more distanced from the tiny few who are not. And so, we “have’s” convene at an important conference to discuss these critical topics that won’t really affect us personally all that much. The fact that we can pay $1,400 or more to attend a two-day discussion above beautiful San Diego Bay demonstrates the point.
We need to remember that the emotional, psychological state of the other 98 per cent is not so intellectually cogent. What has become a two-class society in America may not exactly match some Latin American countries. Our poorer class is probably considered middle-class by the standard of developing nations. But I believe it is the relative distance between classes, not an absolute economic gap number, which should concern us. History tells us over and over again that when the distance becomes too great between the economically privileged and those who struggle daily, societies fragment to the point of complete dysfunction.
The capitalistic approach to solving this dilemma is indeed the best one, in my opinion. Government attempts to mandate solutions result in retardation of the entire society, and diminishment of its economic health. But the privileged two per cent can actively contribute by exhibiting humility, investing in career creating businesses and keeping our “bling” to a minimum. As they say at Victoria Station in London, whilst one steps from train to platform, we would do well to “mind the gap”.
Friday, January 28, 2011